1. Wilfred 11-Jun-07 at 4:17 pm

    I think the value of about everything can be explained by means of the external and internal qualities.

    Value is something different then price. Expensiveness of something is not directly related to value. A diamond is overall highly priced, but not overall highly valued.

    While water will have a high intrinsic value and is definitely more important to stay alive then diamonds, the higher costs (price- not value) of diamonds is caused by other qualisigns then the value for staying alive.

    Several issues make water having a lower price than diamonds. Although water might overall be valued higher then diamonds in a lot of cases. These issues are, among others, the intensity of labor to produce water. The scarcity of diamonds as opposed to water. But also the fact that a really luxerious product just gets additional value by having a higher price and staying at these higher prices. If diamonds would be sold at lower prices their value would certainly also decrease. Part of the higher value is the high price to be paid for it.

    I think the example water as opposed to diamonds is not a real paradox. There is just some saying in Dutch “je kunt geen appels met peren vergelijken”. Which very roughly means here that other products are not to and can not be compared towards each other. It is good for the insights, but eventually each difference will have some logical reason although this might not be a logic one.

    Some more important question here might be what we value in life. And why we do so. And replacing the “we” for certain individuals. And the differences among them and reasons why. Not taking the “things” as departure, but the individual. Thereby seeing economics more from the point of view of individuals and their pluralities as opposed to finance and economy and “the” consumers and workers.

  2. Richard Planck 22-Oct-07 at 9:06 am

    I’m having a lot of problems with the received ‘cross’ which purports to depict equilibrium between ‘supply’ and ‘demand’….

    The received upward-sloping supply curve can ONLY be RIGOROUSLY derived by beginning with the assumption that the demand curve is always and everywhere mathematically horizontal (i.e., that ∂p/∂d = 0.000000). If, instead, we begin the derivation with a downward-sloping demand curve (i.e., where ∂p/∂qd ≠ 0.000000, which is what we ultimately want to include), we end up with a sketch of supply and demand which is not unlike Chamberlin’s ‘monopolistic competition’ (although this author prefers the label ‘completed competition’).
    In plain English, trying to later include a non-horizontal demand curve in our results seems not a ‘relaxation’ of our initial assumption but, rather, a naive (and generally unknowing) attempt to (after-the-fact) impose a contrary initial assumption. If we start with apples, we end up with applesauce; if we start with oranges, we end up with orange marmalade; if we start with apples, we don’t end up with orange marmalade.
    Note that this is not a trivial issue because (for this author, at least) it initiated the unraveling of nearly all of extant economic theory, regardless of ‘school’ and/or political ideology.

  3. psikeyhackr 11-Jun-09 at 11:51 am

    So 40 years after the Moon landing our brilliant economists can’t document the depreciation of all the cars made since 1969.

    Galbraith talked about the planned obsolescence of automobiles in 1959. What have all of the other economists been using for brains since then.

    Google +”Economic Wargames” +Timgar

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